A savings account that pays a higher interest rate than a typical bank account.
The meaning
A savings account that pays meaningfully more interest than a standard bank account. Often much more. A simple way to make your saved-up cash earn a little something while it’s sitting there waiting to be used. Related: Don’t Let Your Cash Sit Around Doing Nothing.
Example
High-yield, 4%~$400
Typical, 0.5%~$50
What $10,000 earns in a year at each rate.Walk through the numbers
$10,000 in an account paying 4% earns about $400 a year. The same money in an account paying 0.5% earns about $50.
Why it matters
It is the right home for your emergency fund and short-term goals, and it beats letting cash sit idle.
For education only and not personalized investment advice. Examples are hypothetical illustrations, not a prediction or a promise of results. All investing involves risk, including the possible loss of principal.
